United States District Court, D. New Jersey, Camden Vicinage
SRC CONSTRUCTION CORP. OF MONROE, Plaintiff,
ATLANTIC CITY HOUSING AUTHORITY, Defendant.
HANTMAN & ASSOCIATES, By: Robert J. Hantman, Esq.,
Counsel for Plaintiff SRC Construction Corp. of Monroe.
McCAY P.A., By: Richard W. Hunt, Esq.; Dana B. Ostrovsky,
Esq., Counsel for Defendant Atlantic City Housing Authority.
RENÉE MARIE BUMB UNITED STATES DISTRICT JUDGE.
MATTER comes before the Court upon Defendant Atlantic City
Housing Authority's (“ACHA”) Motion to Vacate
(“Motion to Vacate”)[Dkt. No. 209-18] the Final
Arbitration Award dated June 20, 2018 (“Final
Award”)[Dkt. No. 209-2]. In response, Plaintiff SRC
Construction Corp. of Monroe (“SRC”) filed (1) a
Motion for Sanctions against ACHA and its law firm, Parker
McCay P.A. (the “Motion for Sanctions”)[Dkt. No.
220], and (2) a Motion to Require the Posting of an Appeal
Bond (the “Bond Motion”)[Dkt. No. 214]. For the
reasons set forth below, ACHA's Motion to Vacate and
SRC's Motion for Sanctions will be
DENIED. SRC's Bond Motion will also be
DENIED, as it is not ripe.
BACKGROUND & PROCEDURAL HISTORY
case involved a dispute arising out of the construction of a
4-story senior living facility in Atlantic City, New Jersey
(the “Project”). The first two times that ACHA
put construction on the Project up for bid, ACHA determined
that even the lowest bids were still too costly. After all
proposals came in over budget on the third bid, ACHA
proceeded to negotiate with the two lowest bidders. Although
SRC's proposal was more expensive than the other
competing bidder, ACHA awarded the bid to SRC because
“it was believed [that] their approach to the project
would be superior.” Final Award, at 1-2.
April 24, 2002, ACHA and SRC entered into an agreement
governing work on the Project (the
“Contract”)[Dkt. No. 209-6]. The Project was to
be completed in approximately a year and a half, but took
more than eight years to complete. The parties have now spent
another eight years in litigation.
8, 2010, the general contractor, SRC, filed the original
Complaint against ACHA, Lindemon, Winkelmann, Deupree,
Martin, Russell & Associate, P.C.
(“Lindemon”), the architect, and Czar Engineering
as Defendants. On April 12, 2011, the Court granted Defendant
Czar's motion to dismiss because SRC failed to produce an
Affidavit of Merit of professional negligence. See
Dkt. Nos. 41, 42. On October 24, 2013, the Court dismissed
Defendant Lindemon for the same reasons. See Dkt.
No. 137. On May 1, 2014, the Court entered the Final Pretrial
Order [Dkt. No. 150].
five years of litigation, with trial scheduled for July 13,
2015, SRC and ACHA agreed to administratively terminate this
action on July 6, 2015, merely a week before trial, and
proceed to binding arbitration. See Dkt. No. 168.
The agreement to arbitrate included the following
requirements: that a three-member panel consist of at least
one attorney; that the Panel would consider pretrial motions
as if it had been the Court; and the arbitration would be
“limited to the claims made in the underlying
litigation and as reflected in the pretrial order.”
[Dkt. Nos. 174, 175].
between the parties ensued almost immediately upon the
commencement of arbitration, returning the case to this Court
for clarification. The Court ruled that the arbitration
proceedings were to be governed by the Final Pretrial Order
and that the applicability of the so-called
“Burt Doctrine” and “Spearin
Doctrine” were to be presented to the arbitrators
pursuant to the parties' agreement to arbitrate.
See Dkt. No. 201, at 5. Eventually, a three-person
panel of arbitrators was selected comprising of Andrew
Carlowicz, Jr., Esquire, Frank Renda, PE and Vincent Riverso,
PE, Esquire (the “Panel”). All three held
themselves out to be competent experienced construction law
counsel and/or professionals, free of conflict. The parties
finally began the arbitration proceedings in the fall of
24 days of arbitration proceedings involving multiple
witnesses and extensive exhibits,  the Panel issued a 19-page
opinion, on June 20, 2018, setting forth the basis for a
final award in favor of SRC in the amount of $2, 294, 074.85.
Final Award summed up the terms of the Project as follows:
The construction cost [of the Project] was primarily funded
by the U.S. Department of Housing and Urban Development
(“HUD”). The parties executed the contract on
April 24, 2002 [(the “Contract”)]. The notice to
proceed date was May 24, 2002, and the project required
substantial completion within 600 days and final completion
within 630 days. Ultimately, ACHA terminated SRC on April 30,
2009; nearly 7 years after the notice to proceed date. A
performance bond had been issued by Travelers who took over
the project and retained a replacement contractor, AJS
Contracting (“AJS”). The completion of the
project ultimately achieved substantial completion in the
fall of 2011; two and one half years after termination
despite the fact that the Project was 98% complete at
Award, at 2.
Panel observed: ”It was clear during the hearings that
even to this date the parties never agreed where the line of
demarcation rested with respect to the design
responsibilities for this aspect of the work between the
architect/engineer (“AE”) design team on the one
hand, versus SRC on the other hand.”
Panel further noted that the arbitration “had two
somewhat unusual wrinkles as well.” Final Award, at 3.
Those wrinkles were, first, that both parties agreed to be
bound by the Final Pretrial Order in this case. Second, ACHA
asserted that it would be entitled to a credit or set off
pursuant to Burt v. West Jersey health Systems, 339
N.J. Super 297 (App. Div. 2001) for any damages
proximately caused by the proven malpractice of the architect
team. SRC opposed ACHA's position and argued that
irrespective of Burt, the so-called
“Spearin doctrine” allowed SRC to
seek damages proximately caused by the malpractice of the
architectural team directly from ACHA. The Panel resolved the
latter dispute in a ruling on August 22, 2017, that any
damages proven to have been suffered by SRC which were caused
by the professional malpractice of the architect or
engineering consultant would be reduced from the overall
damages awarded to SRC in its claim against ACHA.
to 9 U.S.C. § 9, after an arbitration award is entered,
the Court must judicially enforce the award “unless the
award is vacated, modified, or corrected.” Hall St.
Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 587
(2008). “There is a strong presumption under the
Federal Arbitration Act (the “FAA”), 9 U.S.C.
§ 1 et seq., in favor of enforcing arbitration
awards.” Brentwood Med. Assocs. v. United Mine
Workers of Am., 396 F.3d 237, 241 (3d Cir. 2005)(citing
Moses H. Cone Mem'l Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 24-25 (1983)); see also Hamilton
Park Health Care Ctr. Ltd. v. 1199 SEIU United Healthcare
Workers E., 817 F.3d 857, 861 (3d Cir. 2016).
court's review is exceedingly narrow, and a district
court should vacate arbitration awards “only in the
rarest case[s].” Newark Morning Ledger Co. v.
Newark Typographical Union Local 103, 797 F.2d 162, 165
(3d Cir. 1986). The moving party bears the high burden of
proving that the arbitration award should be vacated.
Handley v. Chase Bank, 387 Fed.Appx. 166, 168 (3d
Cir. 2010)(citing Dluhos v. Strasberg, 321 F.3d 365,
370 (3d Cir. 2003))(“The party seeking to overturn an
award bears a heavy burden as these are ‘exceedingly
this Court cannot do is to vacate an arbitration award merely
to correct factual or legal errors. See Major League
Umpires Ass'n v. Am. League of Prof'l Baseball
Clubs, 357 F.3d 272, 279 (3d Cir. 2004). There is a
strongly federal policy in favor of commercial arbitration,
and, thus, this Court begins its review with the presumption
that the award is enforceable. Freeman v. Pittsburgh
Glass Works, LLC, 709 F.3d 240, 251 (3d Cir. 2013).
to 9 U.S.C. § 10(a), there are four grounds upon which
an arbitration award may be vacated:
(1) where the award was procured by corruption, fraud, or
(2) where there was evident partiality or corruption in the
arbitrators, or either of them;
(3) where the arbitrators were guilty of misconduct in
refusing to postpone the hearing, upon sufficient cause
shown, or in refusing to hear evidence pertinent and material
to the controversy; or of any other misbehavior by which the
rights of any party have been prejudiced; or
(4) where the arbitrators exceeded their powers, or so
imperfectly executed them that a mutual, final, and definite
award upon the subject matter submitted was not made.
9 U.S.C. § 10(a).
addition to the four statutory bases for vacating an
arbitration award, there are three common law grounds for
vacatur: 1) an arbitrator's manifest disregard for the
law, as opposed to a legal error; 2) if the award is
completely irrational; and 3) if the award is contrary to
public policy. See Dluhos v. Strasberg, 321 F.3d
365, 369 (3d Cir. 2003).ACHA contends that the arbitrators acted
in manifest disregard of the law. As set forth above, the
standard of review is a deferential one. See Sutter v.
Oxford Health Plans LLC, 675 F.3d 215, 219 (3d Cir.
2012), as amended (Apr. 4, 2012), aff'd, 569
U.S. 564 (2013). If the arbitrators make “a good faith
attempt to [interpret and enforce the contract], even serious
errors of law or fact will not subject [the] award to
vacatur.” Id. at 220.
ACHA'S MOTION TO VACATE THE ARBITRATION
seeking to vacate the arbitration award, ACHA asserts one
statutory ground for relief, “evident partiality”
and a common law ground for relief, “manifest disregard
for the law.” With respect to the latter, ACHA contends
that the Panel exceeded its powers and manifestly disregarded
the law regarding three claims: (1) ...